Total supply of modern office space in Poznań is expected to exceed 500,000 sqm in 2018. According to a report by real estate advisor Savills, the office market in Poznań is the fifth largest regional office market in Poland, however, the growth of the market is accelerating as space under construction is over twice as much as at the end of Q1 2016. The vacancy rate in Q1 2017 decreased year-on-year. Prime headline rents are expected to remain stable over the next 18 months.
“Poznań is one of the most important office locations in Poland,” said Tomasz Buras, Head of Poland, Savills. “The large population and great higher education institutions provide valuable employees, which together with an increasing supply of world class offices ensures further development of the city.”
As stated in “Market in Minutes – Office market in Poznań June 2017,” office stock in the city at the end of Q1 2017 stood at 427,800 sqm with 41,100 sqm delivered to the market since the beginning of 2016. Savills expects it to increase by 20,000 sqm in 2017, however a significant boost of development activity is expected in 2018 and in 2019 (67,200 sqm and 35,000 sqm respectively). The largest projects under construction are: the second phase of Poznań Business Garden by Vastint (46,000 sqm; due in 2018) and Pixel II &III by Garvest (17,800 sqm; due in 2018).
“The Poznań office market has been developing dynamically attracting new well-known global companies,” said Dorota Ejsmont, Head of Landlord Representation, Office Agency, Savills. “With great projects in the pipeline the market should remain strong.”
Demand in 2016 stood at a record high level of 64,100 sqm. In the first quarter of 2017, letting activity reached only 3,900 sqm, however, according to Savills’ forecasts, the current year will end at a high level similar to the last two years, owing to ongoing commercialization of the largest projects under construction.
During the last 15 months, companies from the IT sector leased 25 percent percent of the total volume of take-up, followed by the banking, insurance and investment sector (15 percent) and companies from the energy and industrial sector (10 percent). Most of the leasing agreements were in the form of a new lease (30 percent of total leasing activity), whereas pre-lease agreements accounted for 28 percent of the total volume with another 28 percent generated by lease renewals or renegotiations and 9 percent of the total volume of take-up was in the form of expansions.
The largest transactions include: a lease renewal and an expansion of Enea in Skalar Office Center (6,600 sqm); a pre-lease of OLX Group in Maraton (5,000 sqm); a pre-lease of Sii in Maraton (3,400 sqm) and a lease renewal of Roche in Malta Office Park (3,300 sqm).
The availability of office space in Poznań at the end of Q1 2017 stood at 12.6 percent (53,800 sqm) lower by 1.8 pp than in Q1 2016. The vacancy rate is expected to decrease in 2017, however a hike of the rate is to be seen in 2018 and in 2019 as a high level of new supply is to be delivered to the market.
Prime headline rents in Poznań in Q1 2017 were in the range of EUR 12.50 – 15.00 per sqm/month and are expected to remain stable over the next 18 months. Landlords are offering incentives such as a rent-free period and a fit-out budget, thus effective rents are ca. 10-15 percent lower than headline rents.